CHAPTER 1 :

INTRODUCTION

1
 INTRODUCTION

INTRODUCTION TO THE STUDY

Co-operative banking is a modern phenomenon that was first

witnessed in Germany. Cooperative banking or in other words co-operative
credit societies plays a very important role in the Indian financial system. In a
country like India, agriculture is the most important occupation of the people.
Co-operative banking is the most satisfactory institution for providing finance to
borrowers in rural areas.

For a long period, India was a British colony. Due to prolonged rule of
British Govt. the economy of the country was completely shattered. The Govt.
did not take any attention to the problems of the agriculturist. So they depend in
money lenders for their needs. But money lenders charged high rate of interest for
their loans.

The co- operative movement was originated in India when the British
Govt. initiated steps to liberate Indian peasants from the clenches hands of
the money lenders. Government enacted Deccan Agriculturists Reliefs Act
1879, Land improvements Loans Act of 1883 and the Agriculturists Loan Act
1884. This Act could not make any impact on the grim face of the peasants.

Co-operative banks are playing an important role in the development of the

regions by providing loans and advances to the people who needed the financial
assistance. Which are formed with the principles of co-operation, the important
feature of co-operative banks is they are not focusing on profit motive but service
motive. Banks are providing loans and accepting the deposit from the public
especially in rural areas. It provide credit facility to farmers, small scale industries
etc.

2
 So here I am trying to analyze the loans provided by the Koyilandy Co-
operative Agricultural Development Bank Ltd, Balusseri. To know loans are
how effectively utilized.
In this project I have learned out loan analysis of the Koyilandy Co-operative
Agricultural Development Bank Ltd, Balusseri.

SCOPE OF THE STUDY

Accepting deposit and lending loan are the two fundamental functions of
bank, co operative are not away from basic banking functions. Co operative banks are
focusing priority sectors like agriculture, rural development and offering loans and
advances to the poor and downtrodden people in the society. Quilandy co operative
agricultural bank has been offering various types of loans for the uplift of the above
mentioned society. Here indeed a study is required to asses the performance of
banking operation in general with particularly loan performance is essential, so we
studied loan performance of the bank. Area of study covered various loan schemes,
relationship between debt and equity, deposit and loans.

PERIOD OF THE STUDY

The study pertains to data collected from 2011 to 2015 from balance sheet.

3
OBJECTIVES OF THE STUDY
To study the performance of loans and advances provided by the Koyilandy Co-
operative Agricultural Development Bank Ltd during the period under study
To analysis the relationship between the loans provided by bank with deposit mobilized by
the bank under the study period
To analyze the relationship between debts with equity, and deposits with loans in the Koyilandy
Co-operative Agricultural Development Bank Ltd.
To make suitable suggestions to the bank for improving their operation efficiency in a
subsequent years.

4
LIMITATIONS OF THE STUDY

The main limitation of my study is time constraint, the time allowed to completing the project is 45 days.
So to select complete data about the bank and its loan schemes is difficult. The bank cannot disclose all its
records which kept confidential, so I got only a limited data for doing my project. Busy schedule of
workers and staffs prevented lengthy discussions. Despites these limitations I tried my maximum to
make a successful project.

5
METHODOLOGY OF THE STUDY

I have drawn the various loan schemes of the bank from the deferent financial
statements of the bank, such as balance sheet, profit and loss account, cash flow
statement etc. Both primary and secondary data are used for the study. Primary data
are collected discussion with secretary, manager and staffs. Secondary data collected
from bank documents and journals. Five years loan amount are taken to analyze the
data. Comparison, ratio and trend analysis are used to analyze different loans. Table,
chart and graph etc. are used to present the analyzed data.

6
CHAPTER II: - PROFILES

Co-operative banks in India

Co-operative banks in Kerala
Bank profile

7
CO-OPERATIVE BANKS IN INDIA

The Indian co-operative banking system is three tier systems. It consists

of the following-

State Co-operative Banks

Central Co-operative Banks

Primary Co-operative Banks

State Co-operative Banks

State Co-operative Bank is the apex bank in the co-operative credit system. It is
an association of central co-operative banks. The first and most important
function of state co-operative bank is to provide appropriate financial facilities
to the member banks. It also controls and co-ordinate banks.

Central Co-operative Banks

Central co-operative bank is an association of primary co-operative institutions

operating in a district. It is the policy of the government that there must be a
central co-operative bank, is also known as a District Co-operative Bank.

Primary Co-operative Banks

These are the bottom level of the three tier structure, their formed for
providing financial assistance in the rural areas. Individual mainly, farmers are the
members of this bank.

8
CO-OPERATIVE MOVEMENT IN KERALA

The Kerala Co-operative Societies Act 1969 was enacted with a view to providing for
the orderly development of the co-operative movement in the state of Kerala in
accordance with the relevant directive principles of state policy associated in the
construction of India.

The Kerala Co-operative Societies Act is continuation of Madras

Co-operative Societies Act 1932 and Travancore Cochin Co-operative
Societies Act 1952. Though the state Kerala comes in to existence in 1956 but
the Kerala Co-operative Societies Act was enacted only in 1969 in the Act
come into force on 15 th May, 1969 The Act revived the assent of the
President 5th April, 1969 and the Act come into force on I 5th May, 1969. Today there
are more than 4.5 lakhs of co-operative societies with membership of about 21
crores in India.

HISTORY

The origins of the Kerala State Co -operative Agricultural And

Rural Development Bank can be traced to 1931 The Land Mortgage Banks were
established in Cochin and Malabar regions. The State Land Mortgage Bank has
been merged into the 'Travancore Credit Bank', formed during 1938.As a
successor to the Travancore Credit Bank, the 'Kerala Cooperative Central
Land Mortgage Bank was organized on October 4, 1956.The Cochin Central
Land Mortgage Bank, the Kozhikode, Palakkad and Thalasseri Land Mortgage
Banks were also affiliated to the Kerala Co-operative Central Land Mortgage Bank
prior to its formation. The important events/milestones in the
history of the Bank in the country is as indicated in the table below.

9
IMPORTANT EVENTS IN THE HISTORY OF THE BANK IN THE COUNTRY

Year Important Events

1920 First Land Mortgage Bank in Punjab-Jhung of erstwhile India

1925 First Land Mortgage Bank in Madras province of British India.

1931 State Land Mortgage Bank formed In Travancore as a Department at South

Kerala.
1935 Cochin Central Co-op Land Mortgage Bank formed at Central Kerala.

1938
Kozhikode Co-op Land Mortgage Bank formed on 15/04/1938 under Madras
Province

Palakkad Co-op Land Mortgage Bank formed on 20/06/1938 under madras

1938 Travancore Credit Bank formed as a Joint Stock Company [Under Act IV of
province
1113 M El

1952 Travancore - Cochin Co-op Societies Act came into force [under Act X of 1952]

1956
Kerala Central Co-op Land Mortgage Bank formed [vide bye-law regd. on
04/10/1958]
and started functioning on 25/10/1956
1960 Kerala Co-Op Land Mortgage Banks Act come into force [Act I of 1960]

10
1969 Kerala Co-op Societies Act - 1969 come into force [Act 21 of 1969]

1984 Kerala State Co-op Agricultural Development Banks Act come into force since
30/07/1984 [Act 20 of 1984]

1985 Kerala State Co-op Agri. Dev. Bank Ltd.4017 bye-law 13/85 got registered from
R.C.S Kerala

1986 Kerala State Co-op Agri. Dev. Bank rules - 1986 come into force since 30/04/1986

1990 Kerala State Co-op. Agricultural and Rural Development Bank Act [amended]
1990 come into force [Act 19 of 1990]

2006 Kerala State Coop. Agricultural and Rural Development Bank celebrated the
golden jubilee Year

11
ROLE OF NABARD IN THE DEVELOPMENT OF CO-
OPERATIVE MOVEMENT IN KERALA STATE

The refinance to state co-operative banks and district co-operative bank for short term
(short term agriculture operation) purpose at present is made available by the
NABARD subject to minimum involvement policy. The credits limit statement under
the crop loan system.

Financial assistance by way of loans with NABARD refinance is also provided to

district co-operative banks for various purposes such as Minor Irrigation, Land
development, Plantation, Horticulture, Diary development, Animal husbandry, farm
mechanization, etc and non farm sector outside IRDP.

NABARD also assists credit co-operative banks through state government by way
of providing financial assistance form the long Term operation Fund (LTO) Patterns
of assistance under the scheme is as shown below.

1. KeralaState Co-op: 50% of the paid up share capital

Bank
KSCARDB
District Co-operative 10 to 12 times of owned funds
banks
Farmers serves co- In the ratio of 1:20 paid up share capital subject to a
operative societies maximum of Rs: 2.50 lakhs per society
In the ratio of 1:20 of the paid up share capital subject to
maximum of Rs: 1.50 lakhs
NABARD provides assistance to state government by way of loans carrying interest
is 9%. The loan amount realizing by NABARD is passed to the societies banks
concerned by way of share capital contributed by state government. An amount of
69.53 crores has been provided for the state by up to 2001 under the scheme.

12
NABARD provides refinance to the Kerala state co-operatives agriculture and rural
development bank by way of subscription to the special development debentures to
the extent of 85% to 95% of each issue of special debentures. The remaining portion
shall be subscribed by the government of India and state government. The rate of
interest of refinance sanctioned by NABARD will be such as may be determined by
NABARD from time to time. NABARD assistance under the programs is limited to
the approved unit cost minus subsidy available from the agency. The repayment of
assistance (principal and interest) in respect of special debentures floated shall be
guaranteed fully and unconditionally by the state government.

13
 7

Functions

The Role and Functions of Kerala State Co -operative Agricultural

and Rural Development Bank includes the following:

to mobilize resources for providing long term loans to its affiliated Primary
Co-operative Agricultural and Rural Development Banks, by
floatation of Special Development Debentures, Ordinary Debentures,
Special Rural Housing Debentures, or by way of loans.
To provide loans to its affiliated Primaries, for initial lending, out of
interim finance/cash credit facility arranged and to collect effective
mortgages/gehans, for the floatation of Debentures.
To exercise effective financial control over its affiliated Primary Banks, as a
Central/Apex Bank, subject to the powers vests upon them under the
Banks Act, Rules and bye-laws.
to provide required institutional promotion and self -training support
to its affiliated Primaries, and
to provide direct lending to corporate bodies as approved by State
government, viz. to Kerala State Electricity Board, to Farming Societies etc.

This apex Bank is also expected to mobilize its resources through

Deposit Mobilization from Rural areas and to provide all credit needs of its
ultimate borrower/members provided the clearance of State Government is
obtained for such activities.

14
Structure of the Bank

The Kerala State Co -operative Agricultural And Rural

Development Bank, function on 'Federal' basis in the State. As the Apex Long
Term Credit Cooperative organization in the State, the Kerala State Co -
operative Agricultural And Rural Development Bank has got 48 affiliated
Primary Cooperative Agricultural and Rural Development Banks, which functions at
Taluk level.

The constitution of General Body, Board of Management, Executive

Committee and the Organizational Charts are:

Members

48 Affiliated PCARDBS

The State Government

The KSEB

The SWG Joint farming Society

Board of Directors
Elected members:
Each from a District-14
SC/ST Member 1
Woman Member 1
Ex-Officio Members : Director of Agriculture 1
Registrar of Co-operative Societies 1
The Secretary of Cooperation, GOK 1
The Managing Director, KSCARDB 1
The Chief Gen. Manager, NABARD 1

15
Government Nominees

The Debenture Holder Nominees 3

Executive Committee

President of the Bank - 1

Vice-President 1
Registrar of Cooperative Societies 1
Managing Director of the Bank- 1

Directors (Elected) 5

16
COMPARATIVE STUDY ON THE PERFORMANCE OF CO-OPERATIVE
SECTOR IN KERALA BEFORE AND AFTER INEPENDENCE

As on 1946 As on 1999
1. Total number of co-operatives 1669 11690
2. Total membership 0.02 2.90
3. Share capital 0.32 936.06
4. working capital 0.9 16146.32
5. Loan disbursement 0.11 9899.96
6. Over dues at society level 0.02 264.84
7. percentage of over dues 81.5% 9.5%
8. Over dues at member level 0.17 958.61
9. Percentage of over dues 48.1% 13.5%
10. Sales of consumer 2.25 408.48

Before the formation of state of Kerala co-operatives under the area were
administered by travancore co-operative societies act v of 11 12 (M.E) Cochin co-
operatives societies act XXVI of 11 13 (M.E) and Madras co-operatives act 1932.
After the integration of Travancore and Cochin, Travancore Cochin co-operatives
societies Act 1951 came into force with effect from 15.5.1969 in order to uniform law
on o-operation applicable throughout the state. Consequent on the introduction of
Kerala o-operatives societies act 1969, societies with unlimited liability ceased to
exist and societies with limited liability came into existence. Thereafter government
of Kerala passed the Kerala co-operatives (amendment) act 1999 which came into
force with effect from 1.1.2000. Providing membership to local institution, deposit
guarantee scheme in primary Agriculture Credit Societies, Consortium Lending
scheme, co-operative development and welfare fund, independent election
commission, separate audit wing and Vigilance wing, and co-operative Examination
Board are the new provisions in the amendment Act.

17
PERFORMANCE OF CO-OPERATIVE CREDIT STRUCTURE IN KERALA

Kerala can claim to an elaborate and efficient rural credit system administered
through primary co-operatives, central co-operative bank and Apex o-operative bank.
The co-operative credit structure in Kerala comprises of two parts viz. (i) short and
medium term credit structure in (ii) long term credit structure. The short and medium
credit requirements are met by a three tier system consisting of state co-operative
bank and 1013 Employees credit co-operatives are meeting the Non agriculture credit
requirement of their members.

Position of PACKS in Kerala is strong and their performance is remarkable as

disclosed from the following table below.

SL.NO Particulars per society unit All India average Kerala

1 Membership Numbers 1930 6560
2 Deposit In Lakhs Rs. 4.11 Rs. 119.47
3 Advances In Lakhs Rs. 11.00 Rs. 116.26

The primary agriculture credit societies in the state which were once upon a time
were Nanaya Vinimaya Sahakaran in course of time transformed themselves into the
present agriculture credit societies which can cater al the credit needs of the rural
mass and capable of socio economic activities, got entrenched in drivers sectors of the
economy and touched the lives of all sections of the people at large. Apart from credit
activities, self help group scheme, kissan credit card scheme and cooperative neethi
medical stores scheme are implemented through primary agriculture credit societies.
Further a tea factory with a project cost of Rs. 21000 lakhs is run by the Malanad
Service cooperative bank with the assistance of ICDP Idukki.

18
 During the period off emergency when stringent action were taken against
indigenous money lenders, there arose a social problem, the petty tradesmen and
village artisans who were depending on theses money lenders could not get credit
facility from anywhere. These credit gaps, which imposed a social problem. The
petty tradesman and village artisan who were depending on theses money lenders
could not get credit facility from anywhere. This credit gap which imposed a social
problem was effectively tackled by the co-operative in Kerala. All the credit societies
joined together to tap the internal resources from the state itself be initiating a special
deposit mobilization campaign which commence in the year 1976 as a novel idea to
stabilize the cooperative sector. The entire mechanism supported the scheme and it
was a grand success. The deposit mobilization campaign is organized every year with
a view to increase resources position of Primary Agriculture credit societies. The
performance of theses societies was spectacular in as much of the programs having
achieved 329% of the target fixed or the mobilization of deposit.

Long term credit consists of Primary Agriculture and development banks federated
into an Apex Body viz. Kerala co-operative agriculture and rural development bank.
Various developmental purposes covered by the banks lending activity include minor
irrigation farm mechanization, land development cultivation of plantation or
horticulture crops and diversified activities like daring fish culture, poultry farming
biogas, goat rearing, sericulture etc. The primary agriculture development banks area
having 8:24 laths members and share capital of Rs. 75.40 crores. The working capital
of the banks is Rs. 1004.62 crores and percentage of overdue sat member level is six
only.

19
 THE KOYILANDY CO-OPERATIVE AGRICULTURAL
AND RURAL DEVELOPMENT BANK LTD.
BALUSSERY

In Koyilandy Co-operative Agriculture and Rural Development Bank

(KSCARDB) is situated at Balussery, 25 km away from Calicut city. The area
of operation of this bank is within the limits to Koyilandy Taluk.
Considering the need and necessity or the development of farm ers and
agricultural people of Koyilandy Taluk decided to function at co-operative
banking society for the progress of agriculture. The head office of the bank is
situated in Balussery.

The important function of bank is giving loans on the guarantee of

security. The main source of bank is the loan from Kerala State Co -
operative Agricultural Rural Development Bank (KSCARDB) and from
different types of loans. The major purpose of the bank advance loans are land
development plantation and minor irrigation. Besides the above purpose bank
advanced loans for purchasing goods, vehicles for transporting agricultural
products. In addition to above bank also advanced loans to small farmers for
constructing new houses and repair the existing house. Now the bank also gives
educational loans to students for their studies.

Brief history of KSCARDB

The present KSCARDB was registered as a primary co-operative

and mortgage bank on 28-03- 1974 with Koyilandy Taluk as its area of operation.
The registered and administered office of the bank situated at Balussery: During
the early period banks activity was confide to advancing loans for the purpose of

20
land development and minor irrigation under the ordinary lending programs.
Then the bank has launched scheme loans under Agricultural Rural
Development Schemes (ARDS) and Special Agricultural Development Unit
(SADU) during the year 1977-1978 and 1978-1979. After passing Kerala State
co-operative Agricultural Development Act in 1984 the name of the bank was
changed into Koyilandy Co-operative Agricultural Development Bank entered
into the field of non-farm, rural housing and other allied activities.

ORGANISATION PROFILE

The organizational set up of the bank is federal. The bank is

affiliated to Kerala state cooperative Agricultural and Rural Development
Bank. The area of operation of this bank is confined to Koyilandy Taluk of
Kozhikode revenue district comprising of 4 national extension scheme blocks,
35 villages, 24 panchayath& one municipality of total area 672.13sq.km and the
population is about 5.55 lacks as per latest census. The head office of this
Bank is situated at Balussery with 2 separate sections. A section
functions as head office and it deal with establishment, administration,
the sanction of loan application. The second sections deals with the function
of a branch such as receiving loan application, processing and
disbursement of loans, preparation of periodical demands and also undertakes
recovery works.

21
ORGANIZATION STRUCTURE

GENERAL BODY

BOARD OF DIRECTORS

PRESIDENT

SECRETARY

ASSISTANT SECRETARY

MANAGER

SENIOR SUPERVISOR

JUNIOR SUPERVISOR

SENIOR CLERK

JUNIOR CLERK

SUB STAFF

22
ORGANISATION SET UP

GENERAL BODY

General body is the association of 'A" class shareholders of the bank.

According to the provisions of Kerala co-operative societies Act 1969, the general
body must meet in time.

With the one month after the completion of the co-operation year. This
meeting is called annual general body.
At the request of the president or members of the board.
On the request made by members not less than 1/5 of total number of
members.

Duties of General body:-

To liquidate the time bared board of Directors and elect new director
board in every 5 years.

Determining maximum limit to the loans that can be allowed to members

subject to the recommendations of general body.
To pass annual budget of the bank.

To take decisions about the expulsion of any members.

D Gaining approval to the annual report of the bank.

BOARD OF DIRECTORS

Board of directors has been responsibility of the proper working of the bank.
Board of director has the right to co-ordinate and controls the affairs of the
bank. The board consists of nine member elected from among in a board is 5
years. Members of the board have the right of resign. Out of nine members of the
board one is reserved for scheduled caste and one for women. The board has a
president. a vice president and a treasurer elected from them.
23
PRESIDENT

President is the head of board of directors. He has the power of co -

ordinate the activities of the members and to give directors to the secretary for
smooth work of the bank.

SECRETARY

Secretary is the chief officer of the bank. Today the secretary

looks after management of the bank also.

STAFF

At present there is 30 staff in the bank. As per the classification

approved by the registrar the bank has required 34 staff.

MEMBERSHIP

Membership of the bank is voluntary ad available without any

restriction of any social, political, religious discrimination.

SHARE CAPITAL

There are mainly three types of shares issued by the bank namely 'A' class
'B' class and 'C' class. Among this B' class shares are nontransferable and non-
refundable and the value shall be transferred to reserve fund on the clearness of
the relative loans. 'B' class shareholders are not entitled to vote class
shares shall be available for subscription only to the State Government.

24
Funds:

The bank will ordinarily obtain fund from the following sources:

1. Share capital

2. Fund from NABARD, through Kerala State Co-operative Agricultural and

Rural Development Bank.

3. Entrance fee and other fees.

Borrowings:

It shall be competent to the committee to borrow funds from the state co-
operative Agricultural Development Bank such document as may be necessary in
this behalf.

The total borrowing of the bank shall not exceed 50 times of the paid up
share capital plus reserve fund.

Annual statement

The board shall prepare annually in such form as may be prescribed by the Registrar.

1. A statement showing receipt and disbursement of the year

2. A profit and loss account.

3. A balance sheet

25
Objective of KCARDB are-

To promote the economic interest to arrange for funds to be sent to

its members on the immovable property, fixed assets or without
security upon the specific guaranteed of the government of interest
thereon for land important and productive purposes.
Development of diary, poultry, piggery, sheep, goat and other five
stock and inland and marine fisheries.
Procurement of fisheries requisites like fishing boat,
mechanized and non-mechanized fishing net twine, ropes and
marine paints.
Repair of farm house.

Production of animal and poultry feed.

Procurement and installation of equipment and machinery for

processing marketing and transportation of all agricultural products
of animal origin like milk meat, fish, eggs manual; and construction of
building of any such purpose.
Redemption of prior debts.

26
DETAILS OF LOANS

The bank provides loans to the members for the productive purpose for getting the
loans. The person who applied for the loans from the bank are in prescribed form
mentioning the name and address of the borrower, Membership number, loan amount,
required etc. When getting the application the bank certifies the entire documents
which are attached with the application. When the properties are mortgaged with the
bank and ends an official for verification of the land and value of the market proves
of the land sanctioned. When this procedure is over, the bank passes the application in
the board meeting.

1. This member should not be a defaulter to the bank.

2. He should furnish security at the prescribed manner.
3. He should maintain adequate share in the bank ration prescribed.

RECOVERY OF LOANS

Regularity the repayment of loan is a very important part of cooperative

banking. When a borrower fails to repay the loan amount and interest, bank should
wait for the response. If there is no response from the part of borrower then bank
file a suit in the court against the borrower, after examining all the matters to
recover the loan amount from borrower by way of attachment. The bankers sent
notice to the borrower inform him that the bank going to attach the property.

The attachment can undertake by the ban after the publishing the news in the
details have wide publication in the area after the expiry f the notice period the
bank give chance to the borrower on repayment of loan. By way of attachment and
sale the bank can realize the loan with interest. If there is any balanced amount that
should give to the borrower by the bank.

27
LOAN SCHEMES

A major portion of the resources of the bank is employed for granting loans and
advances. The bank provides different types of loans to the members for there
needs that the short medium and long term loans.
Loan schemes

Ordinary
Scheme loans

Non farm sector(NFS)

Housing loan

Rural Housing Scheme(RHS)

Kisan credit card loan

Industrial lending scheme

Cash credit

Gold loan

Housing loan to staff

Vehicle loan to staff

28
CHAPTER III
REVIEW OF LITERATURE

29
REVIEW OF LITERATURE
Various studies conducted and numerous suggestions were given to bring
effectiveness in the working and operations of financial institutions especially the
banks. Narsimham Committee (1991) emphasized on capital adequacy and liquidity,
Padamanabhan Committee (1995) suggested CAMEL rating (in the form of ratios) to
evaluate financial and operational efficiency, Tarapore Committee (1997) talked
about Non-performing assets and asset quality, Kannan Committee (1998) opined
about working capital and lending methods, Basel committee (1998 and revised in
2001) recommended capital adequacy norms and risk management measures. Kapoor
Committee (1998) recommended for credit delivery system and credit guarantee and
Verma Committee (1999) recommended seven parameters (ratios) to judge financial
performance and several other committees constituted by Reserve Bank of India to
bring reforms in the banking sector by emphasizing on the improvement in the
financial health of the banks.

Experts suggested various tools and techniques for effective analysis and
interpretation of the financial and operational aspects of the financial institutions
specifically banks. These have focus on the analysis of financial viability and credit
worthiness of money lending institutions with a view to predict corporate failures and
incipient incidence of bankruptcy among these institutions.

1. Dutta and Basak (2008) in their
should improve their recovery
computerized monitoring of loans,
organize regular workshops to
environment.
study analysed that Co-operative banks
performance, adopt new system of
implement proper prudential norms and
sustain in the competitive banking

2. Campbell (2007) in his study analysed about the relationship between

nonperforming loans (NPLs) and bank failure and argued for an effective
bank insolvency law for the prevention and control of NPLs for developing
and transitional economies as these have been suffering severe problems due
to NPLs.

30
3. Machiko Nissanke and Ernest Aryeetey in their study Financial
Integration and Development explained about the loan administration and
risk reduction by formal lenders (i.e. banks), Credit Analysis Standards,
Increase Project equity requirements, Loan screening of banks and assessing
creditworthiness during screening. Banks consider return on project as an
important indicator for appraising the projects.

4. Mr. V.M.V.Subba Rao, B.Com., FCA, DISA(ICA), MICA in his study

Monitoring of Advances -- A New Look analysed the researcher gave two
views on the commencement of monitoring process-(i)Narrow view- the
monitoring starts only after the advance is disbursed, (ii)Broad view- at the
time of conducting credit investigation of the borrower and continue in all
other stages of credit cycle.

5. Eleanor Charles (1995) in his study Appraising the Role of the Appraiser
analysed about the centralized function of the appraiser to grant the loan and
virtually every loan applicant will have to rely on an appraisal to set a value
on the property against which the loan is to be made.

6. Hrishikesh Bhattacharya in his study Credit Appraisal and Lending

Strategies and D D MUKHERJEE in his study Credit Appraisal, Risk
Analysis And Decision analysed lending strategies, credit appraisal, risk
analysis and lending decisions keeping in mind the broad framework of
corporate banking strategy, and helps us understand better the vast and
significant changes in the financial market. Numerous examples from the
world lof business have been provided to facilitate better understanding.

7. Hrisikes Bhattacharya in his study Lending Strategy, Credit Appraisal

and Lending Decision analyzed the liberalization of the financial sector
demands a new technology to cope with the rising pressures on the
profitability of banks and financial sector institutions. Analyzing lending
strategies, credit appraisal, risk analysis and lending decisions, while keeping
in mind the broad framework of corporate banking strategy, this book
emphasizes that lending is no longer an activity restricted to the assets side of
the balance sheet. An invaluable tool for practicing managers and students of
business and financial management, this book demands no prior specialized
knowledge of the subject, taking readers from the rudiments of credit
appraisal to advanced levels of decision-making. Numerous examples from

31
 the world of business have been provided to facilitate a better understanding
of the vast and significant changes in the financial market.

From the foregoing review of earlier studies hardly to find that there was no study
under the titled Loan Analysis of Koyilandy Co-operative Agriculture Bank. So we
decided to conduct a study under the title of Loan analysis Koyilandy Co-operative
Agriculture Bank.

32
CHAPTER IV
ANALYSIS AND INTERPRETATION
Analysis of loan schemes
Trend analysis

33
Table 4.1: Comparative analysis of various loans provided by the Koyilandy
co-operative Agricultural and Rural Development Bank Ltd. Balussery

Years

Types of Loans 2012 2013 2014 2015

Ordinary loans (2.23%) 29.65% 71.72% 81.01%

Housing loans 38.005% 115.3% 229.33% 441.64%

Non farm sector(NFS) (92.79%) (57.67%) (73.21%) (87.41%)

Rural Housing Scheme

(34.92%) (60.18%) (77.71%) (87.13%)
(RHS)

Kisan credit card loan (54.36%) (81.17%) (85.26%) (87.86%)

Sworaj credit card (52.02%) (76.44%) (76.44%) (76.44%)

Gold loan (39.1%) (88.33%) (157.96%) (88.97%)

Cash credit (2.16%) (201.87%) (1282.84%) (2262.28%)

Housing loan to staff (58.32%) (78.33%) (204.78%)

Vehicle loan to staff (65.34%) (33.92%) (8.52%)

34
INTERPRETATION

Ordinary Loans
With regard to ordinary loans, from the table it is clear that the loan disbursed shows
an increasing trend with percentage increasing from 2.23% to 81.01%.

Housing Loans
With regards to housing loan, from the table it is clear that the loan disbursed shows
an increasing trend with percentage increasing from 38.005% to 441.65%.

Non Farm Sector (NFS)

In the first year 2012 the NFS shows a higher trend of 92.79% and in the year 2013 it
shows a decrease of 57.67% . in the next two years 2014& 2015 it shows a reapidly
increasing of 73.29% and 87.41% respectively.

Rural Housing Loans (RHL)

Rural Housing Loan is the one of the important loan scheme in which the table shows
an increasing trend with percentage increasing 34.92% to 87.13%..

Kisan Credit Card Loan

With regard to kisan credit card loan , from the table it is clear that the loan disbursed
shows an increasing trend with percentage increasing from 54.36% to 87.86%.

Sworaj Credit Card

In the year 2012 the Sworaj credit card shows trend of 52.02% . Then it increases to
76.44% and remain constent for 2013,2014 & 2015.

35
Gold Loan
With regard to gold loan from the table is the clear that loan disbursed shows an
increasing trend up to the year 2013 from 39.1% to 157.96% . Then in the year 2014
it decreasing to 88.97%.

Cash Credit
With regard to cash credit, from the table it is clear that the loan disbursed shows an
increasing trend with percentage increasing 2.16% to 2262.68%.

Housing Loan to Staff

The above table it is clear that the loan disbursed shows an increasing trend with
percentage increasing from 58.32% to 204.78%.

Vehicle Loans to Staff

With regard to vehicle loans to staff. From the table it is clear that the loans disbursed
shows a decreasing trend with percentage decreasing from 65.34% to 8.52%.

36
 Analysis of loans

Ordinary loans

Table 4.2 : showing ordinary loans

Year 2011 2012 2013 2014 2015

Amount 6496635 6351358 8423214 11156190 11760115

Source : Balance sheet

INTERPRETTATION: The above table shows a consecutive change in the

agricultural loan. In the year 2011 it was in a lower amount (6496635). And next year
it decreases to 6351358. Then it starts rising. In the year 2015 (11760115) there was
an increase in the loan amount compared to previous years. That means bank provide
more loans.

37
14000000

12000000

10000000

8000000

6000000

4000000

2000000

0
2011 2012 2013 2014 2015

Chart 4.1 :Showing ordinary loan

38
 HOUSING LOAN

Table 4.3: Table showing housing loans

YEAR 2011 2012 2013 2014 2015

AMOUNT 128818899 177776945 277355801 424243955 697745132

Source: Balance sheet

INTERPRETTATION: While analyzing the housing loan provided by the bank, it

shows an increasing trend over the five years. In the year 2011 the housing loan was
around 13 crore rupees. Then in the 2015 the housing loan granted is reached to 69
crore rupees.

39
800000000

700000000

600000000

500000000

400000000

300000000

200000000

100000000

0
2011 2012 2013 2014 2015

Chart 4.2 : Chart showing housing loan

40
 Non farm sector(NFS)

Table 4.4 : Table showing non farm sector

Year 2011 2012 2013 2014 2015

Amount 38567243 2780400 16324263 10332151 4853639

Source: Balance sheet

INTERPRETTATION: When we looking to the NFS loans it were very high in the
year 2011. Then it decreased in next year. And it increased in the year 2013. But after
the 2012 it starts to fall. In 2011 the amount was 38567243 then it is decreased to
4853639 in the year 2015.

41
45000000

40000000

35000000

30000000

25000000

20000000

15000000

10000000

5000000

0
2011 2012 2013 2014 2015

Chart 4.3 : showing non farm sector

42
Rural Housing Scheme (RHS)

Table 4.5: Table showing rural housing scheme

Year 2011 2012 2013 2014 2015

Amount 8104979 5274141 3226604 1806187 1042548

Source : Balance sheet

INTERPRETTATION: Rural housing loan is the one of the important loan scheme
in which the table and graph shows a decreasing trend. It is not keeping a stable
position so we can say rural housing loans are coming down. In 2011 the amount was
8104979 it decreased to 1042548 in 2015.

43
9000000

8000000

7000000

6000000

5000000

4000000

3000000

2000000

1000000

0
2011 2012 2013 2014 2015

Chart 4.4 : Chart showing rural housing scheme

44
Kisan credit card loan

Table 4.6 : showing kisan credit card

Year 2011 2012 2013 2014 2015

Amount 3841102 1753033 723070 565961 465961

Source: Balance sheet

INTERPRETTATION: Kisan credit card loan also showing a down trend, the
requirement of this loan is decreased over the years. Farmers are not reaching to this
loan. In 2011 it was 3841102 then keeping falling every year at last 2015 it reached
465961.

45
4500000

4000000

3500000

3000000

2500000

2000000

1500000

1000000

500000

0
2011 2012 2013 2014 2015

Chart 4.5 : Chart showing kisan credit card

46
SWORAJ CERDIT CARD

Table 4.7 : table showing sworaj credit card

Year 2011 2012 2013 2014 2015

Amount 751782 360688 177079 177079 177079

Source: Balance sheet

INTERPRETTATION: Sworaj credit card loans showing a decreasing trend. It

means the demand for SCC decreasing year by year. In the last three years that is
2013,2014 and 2015 it is constant. In other two years it was at highly growing
tendency.

47
800000

700000

600000

500000

400000

300000

200000

100000

0
2011 2012 2013 2014 2015

Chart 4.6 : chart showing sworaj credit card

48
Gold loan

Table 4.8 : Table showing gold loans

Year 2011 2012 2013 2014 2015

Amount 5131979 7138940 9665395 13238749 9697970

Source : Balance sheet

INTERPRETTATION: Gold loan is the one of the most important loan scheme
provided by the bank. From the above chart we can see in the years 2011 to 2014 it
was high demand in loans. In 2015 the amount of loan decreased to 9697970.

49
14000000

12000000

10000000

8000000

6000000

4000000

2000000

0
2011 2012 2013 2014 2015

Chart 4.7 : chart showing gold loan

50
CASH CREDIT

Table 4.9 : Table showing cash credit

Year 2011 2012 2013 2014 2015

Amount 1262442 1289768 3811023 17457641 29809881

Source : balance sheet

INTERPRETTATION: While analyzing the cash credit loan provided by the bank,
it shows an increasing trend over the five years. In the year 2011 the cash credit was
around 1262442 rupees. Then in the 2015 the housing loan granted is reached to
29809881 rupees.

51
35000000

30000000

25000000

20000000

15000000

10000000

5000000

0
2011 2012 2013 2014 2015

Chart 4.8 : chart showing cash credit

52
Housing loan to staff

Table 4.10 : Table showing housing loan

Year 2011 2012 2013 2014 2015

Amount 0 375810 595010 670210 1145410

INTERPRETTATION: The above graph showing an increasing trend. It means the

demand for housing loans to staff is increasing year by year. In the year 2011 the
bank not provided a single amount as housing loan to staffs or nobody took this loan.
And after 2011 it increased year by year. In the year 2012 it was 375810. Then 2014
it reached 1145410

53
1400000

1200000

1000000

800000

600000

400000

200000

0
2011 2012 2013 2014 2015

Chart 4.9 : chart showing house loan for staff

54
 Vehicle loan to staff

Table 4.11 : Table showing vehicle loan to staff

Year 2011 2012 2013 2014 2015

Amount 0 543510 898650 727910 589870

Source : Balance sheet

INTERPRETTATION: Bank is providing loans to the staffs for purchasing the

vehicle. In the year 2012 the bank not provided vehicle loans to staff or nobody took
this loan. And 2012 in increased to 543510 and next year again increased to 898650.
After 2013 it starts falling

55
1000000

900000

800000

700000

600000

500000

400000

300000

200000

100000

0
2011 2012 2013 2014 2015

Chart 4.10 : chart showing vehicle loan to staff

56
 Loan to deposit ratio

It is also known as credit-deposit ratio. It is a commonly used statistic for

assessing a banks liquidity by dividing banks loan by its total deposit. if ratio is too
high, that means the bank might not have enough liquidity to cover any unforeseen
requirements. If the ratio is too low the bank may not be earning as much as they
could be.

Loans
Deposits
Table 4.12: table showing loan to deposit ratio

Year Total loans total deposit loan deposit ratio

2011 446911311 437599142 1.021280135

2012 477539097 459303983 1.039701624

2013 582941448 569667857 1.023300579

2014 764005381 736942028 1.036723856

2015 581447788 569667857 1.019426330

INTERPRETTATION: It is clear from the above table , there are moderately high
ratios. So bank having enough liquidity to cover any unforeseen fund requirements.
The ratio is not too low, so the bank can be earn as much as they could

57
1.045

1.04

1.035

1.03

1.025

1.02

1.015

1.01

1.005
2011 2012 2013 2014 2015

4.11 : CHART SHOWING LOAN TO DEPOSIT RATIO

58
 Debt equity ratio

The Debt Equity Ratio measures the relationship between outside borrowings and
owned funds of any enterprise. It signifies the concerns ability to repay the debts out
of its net worth and helpful to identify the long term solvency of the concern. The
higher ratio is an indicator of the greater claim of creditors than the owners, which is
not a desirable one.
The equation for Debt Equity Ratio is:

Debt Equity Ratio = Total Debts/ Total Equity (equity + reserve fund)
Table 4.13: Table showing debt and equity ratio

Year Debt Equity Debt Equity Ratio

2010 51836287 37160574 1.39

2011 46186602 36229529 1.27

2012 43759914 35370074 1.23

2013 50953712 37877284 1.34

2014 56966678 40677500 1.40

INTERPRETTATION: The normal debt equity ratio followed in business enterprise

is 2:1.Here the ratio is less than two every year. The table reveals that the debt equity
ratio shows that from the year 2010 to 2012 the ratio was decreasing, it means the
bank reduces their debt consumption. In the later years 2013 and 2014 again the ratio
increased and finally reached in 1.40:1.

59
1.45

1.4

1.35

1.3

1.25

1.2

1.15

1.1
2011 2012 2013 2014 2015

4.12: CHART SHOWING DEBT EQUITY RATIO

60
CHAPTER V

Findings
Suggestions
Conclusion

61
FINDINGS

1. The bank is providing more than 10 schemes of loans to the members and
public.

2. Total loan provided by the bank shows an increasing trend. This shows
an efficiency of the bank provides more medium term loans as
compared to short and to long term loan.

3. Ordinary loans showing a good demand among the members so it is the

one of

4. The trend of the housing loan schemes is very high.

5. Some loans like RHS, KCC, and ILS are in a down trend.

6. Demand for the sworaj credit card loan is better it has a growing trend.

7. Bank not providing much more importance to vehicle loans and housing
loans to the staff.

8. When we comparing the loan schemes ordinary loans and gold loans are in
a same proportion, others are not in a same proportion.

9. When we analyzing the trend of the loans SCC, gold loan, cash credit are
showing a better future trend this loans are currently performing well. But
in the case of other loan schemes the future trend showing a decreasing
tendency.

10. The deposit-loan ratio shows the bank having better liquidity to meet the
loans.

11. The debt equity ratio of the bank is very good because it almost besides of the
ideal ratio.

12. The banks performance was good in its lending activities.

62
 SUGGESTIONS

There are many problems in The Koyilandy Co-operative Agricultural

Development Bank Ltd, Balusseri. Some suggestions are given for the improvement
of the bank.

1. It is necessary that every care should be taken to see that the amount is recovered
regularly.
2. As the deposits are main sources of the fund for doing business of the bank, the
bank should collect more deposit for the better working of the bank by
introducing attractive schemes.
3. The bank should manage their loans effectively.
4. Avoid unnecessary lending schemes, staff loans are unnecessary schemes
because it should not come under the agricultural and priority sector so avoid
that.

5. From the above analysis we can understand some schemes are not productive
like ILS loan schemes to kisan credit card etc so bank should take effective
steps to improve the loan schemes.

6. Try to include some more effective schemes for farmers like seed schemes,
harvest related schemes, labour assisted schemes etc.

7. Focus on customers oriented banking and improve personal service for them.
8. In the Kerala the influence of Gulf money at maximum even in rural areas.
There for lender to increase the business of Co-operative bank, permit them to
start non-resident investment account.
9. To get more attraction for the loans and deposits banks should introduce some
attractive advertisements.

10. The bank should be more professional in its approach for attracting new
customers.

63
 CONCLUSION

Co-operative banks are institutions established on the principle of co-

operation and they deal in ordinary banking business. They are formed to extend
credit facility to farmers and small scale industries. It collects funds through share,
accept deposit, and grant loans. The main features of co-operative bank are that it has
no profit motive. Co-operative banks are very helpful to meet the financial
requirement of small farmers, artisans etc. Co-operative banks play an important role
in the rural development of the country. It is described as a method of promoting
economic interest through a common attempt with a common objective. It aims
at material and moral advancement of the people.

Koyilandy Co-operative Agricultural Development Bank Ltd, Balusseri

satisfying the credit needs of the people. While analyzing the deferent loan
schemes of the bank we can able to understand the loans advances are performing
well except one or two schemes. Different year Annual reports of the bank
reveal that the performance of the bank has been satisfactory. That is bank
provides deferent types of loans without any discrimination and also helps to
make co-operation among the people. It enables the members and employees
to use their best efforts to attain a better standard of living without any exploitation
to others. This bank has also helps to improve the standard of living an
economic status of the people in the area of operation of the bank. Thus, the
Koyilandy Co-operative Agricultural Development Bank Ltd, Balusseri has
also play an important role in the economic development of the region and
the country.

64
 BIBLIOGRAPHY

Co-operation Principles and Practice by T.S BALAN. In the year 1999 in

kanpur.
Theory, History and Practices of Co-operation by BEEDI R.D (Meerut: Loyal
Bros. Depot, 1971.
Rural Development and Banking in Indian Thoery by AJITH SINGH.
Publisher, Deep & Deep, 1985
Other office recods.

WEBSITS

En.wikipedia.org
www.banknetindia.com
www.keralalandbank.org

65